U.S. looks to Canadian model as it debates air-traffic-control privatization

A major debate is underway about how to fix the United States’ bureaucratic air traffic control network, and stakeholders are looking north to Canada’s privatized system for a model of the way it should be done.

The U.S. Federal Aviation Administration has struggled for a long time to secure enough funding to update its aging infrastructure, while Ottawa-based Nav Canada has quietly turned itself into a world leader in technology, exporting its know-how around the world.

And as the clock ticks down towards a March 31 deadline for Congress to authorize new funding for that FAA, several key players have been visiting Ottawa to learn about Canada’s air navigation service, said Sid Koslow, chief technology officer at Nav Canada.

Koslow said he recently hosted Bill Shuster, the Pennsylvania Republican who chairs the House Transportation Committee, as well as senior executives from United Continental Holdings Inc. and American Airlines Group Inc.

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“Chairman Shuster particularly seems quite interested in the Nav Canada model and he’s the key person there, so certainly our model is getting a lot of attention,” Koslow said in an interview.

Shuster is expected to incorporate a proposal within the FAA bill that will take air traffic control out of the hands of the government agency and change it with a privatized, non-profit organization modelled after Nav Canada.

Most from the major U.S. airlines offer the idea, said Sharon Pinkerton, senior vice-president for legislative and regulatory policy at Airlines for America, an industry lobby group.

“We are advocating for any federally chartered, non-profit, independent organization,” Pinkerton said within an interview.

Pinkerton said she  doesn’t believe it’s possible to simply “cut and paste” air traffic control systems across countries, but Nav Canada may be the closest model to what they’re recommending.

“(Nav Canada) has that non-profit element that I think is essential,” she said.

She added that the U.S. also studied other models, including Britain’s for-profit system and Germany’s government corporation (something like a Crown corporation in Canada).

“We possess the luxury of having had other people go forward first and pave the way in which,” she said.

One of the major issues in the U.S. has been the possible lack of stable funding for air traffic control, which becomes a problem each time Democrats and Republicans start wrangling over the federal budget. As a result, the FAA has “a terrible record when it comes to capital investment,” said Chris Edwards, director of tax policy studies in the Cato Institute, a Washington-based libertarian think tank.



“I think the Canadian model is a great model for that United States,” Edwards said within an interview. “There’s a motivation to innovate and generate new revenues much like in a private, for-profit business because the entity’s reached satisfy the bottom line without subsidies.”

Nav Canada began Two decades ago if this purchased the country’s civil air navigation system in the authorities for $1.5 billion. The company inherited a mess: Capital projects were facing major delays and price overruns, and also the revenue produced by air travel ticket taxes wasn’t keeping pace with escalating costs.

The company’s track record continues to be impressive. Since 1996, it’s invested a lot more than $2 billion in infrastructure, cut staffing levels by 25 %, improved its safety record and be a worldwide leader in technology. The organization also revamped its fee structure – service charges are actually based on aircraft weight and distance flown – and it has actually reduced its fees twice since 2004.

“I think that from most every aspect, it has been successful,” said Koslow.

Not everyone supports the Canadian model, however. Capt. Steve Dickson, senior vice-president of flight operations at Fuel prices Inc., also visited Nav Canada recently and said he came away unimpressed.

“We found that Nav Canada’s privatization model may work well for Canadian airspace, which is about one-tenth the scale and complexity of U.S. airspace,” Dickson wrote in an editorial for Crain’s New York Business.

“But the lack of any solid data from Nav Canada that will have supported moving to privatization within the U.S. was startling.”

He added he saw “zero quantifiable data showing operational efficiency” or cost advantages because of privatization.

Proponents reject the arguments that U.S. airspace is simply too busy for the Canadian model to operate.

“That’s complete nonsense,” said Edwards. “There’s no evidence for that. Actually, I’d say it is the opposite: it’s tougher for a government bureaucracy to run a massive system than a private company.”

Nav Canada’s Koslow agreed, saying U.S. airspace may be busier, but it also has more resources.

“Scale should operate in their favour,” Koslow said. “If you will find advantages to our model, then the benefits ought to be multiplied by size.”

Another critique originates from the private aviation community, that is worried it’ll lose its unrestricted, affordable access to airports and airspace.

But Rudy Toering, CEO from the Canadian Business Aviation Association, asserted hasn’t been an issue in Canada.

“Our knowledge about Nav Canada has been positive,” Toering said in an email.

The privatization debate is expected to come to a head within the future when the proposal is officially put into the FAA funding bill. The legislation should be passed by March 31, once the agency’s existing funding runs out.

kowram@nationalpost.com

Twitter.com/KristineOwram